Dividend Investors: Don't Be Too Quick To Buy Kentucky First Federal Bancorp (NASDAQ:KFFB) For Its Upcoming Dividend

By
Simply Wall St
Published
July 24, 2021
NasdaqGM:KFFB
Source: Shutterstock

Readers hoping to buy Kentucky First Federal Bancorp (NASDAQ:KFFB) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. Meaning, you will need to purchase Kentucky First Federal Bancorp's shares before the 29th of July to receive the dividend, which will be paid on the 25th of August.

The company's next dividend payment will be US$0.10 per share. Last year, in total, the company distributed US$0.40 to shareholders. Based on the last year's worth of payments, Kentucky First Federal Bancorp stock has a trailing yield of around 5.7% on the current share price of $7.0427. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to check whether the dividend payments are covered, and if earnings are growing.

See our latest analysis for Kentucky First Federal Bancorp

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Kentucky First Federal Bancorp paid a dividend last year despite being unprofitable. This might be a one-off event, but it's not a sustainable state of affairs in the long run.

Click here to see how much of its profit Kentucky First Federal Bancorp paid out over the last 12 months.

historic-dividend
NasdaqGM:KFFB Historic Dividend July 24th 2021

Have Earnings And Dividends Been Growing?

Businesses with shrinking earnings are tricky from a dividend perspective. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Kentucky First Federal Bancorp was unprofitable last year and, unfortunately, the general trend suggests its earnings have been in decline over the last five years, making us wonder if the dividend is sustainable at all.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Kentucky First Federal Bancorp's dividend payments are effectively flat on where they were 10 years ago. If a company's dividend stays flat while earnings are in decline, this is typically a sign that it is paying out a larger percentage of its earnings. This can become unsustainable if earnings fall far enough.

We update our analysis on Kentucky First Federal Bancorp every 24 hours, so you can always get the latest insights on its financial health, here.

Final Takeaway

From a dividend perspective, should investors buy or avoid Kentucky First Federal Bancorp? It's hard to get past the idea of Kentucky First Federal Bancorp paying a dividend despite reporting a loss over the past year - especially when the general trend in its earnings also looks to be negative. Kentucky First Federal Bancorp doesn't appear to have a lot going for it, and we're not inclined to take a risk on owning it for the dividend.

With that being said, if you're still considering Kentucky First Federal Bancorp as an investment, you'll find it beneficial to know what risks this stock is facing. Our analysis shows 3 warning signs for Kentucky First Federal Bancorp that we strongly recommend you have a look at before investing in the company.

A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.

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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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